What is Negotiated in the Contract? Part 1
In short EVERYTHING from the very first time I schedule the appointment to show a home I’m negotiating and positioning the listing agent for my clients. What does that even mean? Let me give you an example:
Hi this is Becca Summers. I’d like to show the home at 123 Main Street my buyers are very motivated and need to get into a home yesterday. Can we come and see the home in an hour. We will be writing an offer for full price.

Or

Hi this is Becca Summers I’d like to show home 123 Main Street tomorrow between 4-5.

Now this might be extreme, I’ve never had someone say to me their client needed to be in a home yesterday, but it helps illustrate the differences. In the first example the buyer is trying to get into the home fast, which in a hot seller’s market it isn’t uncommon to need to get in quickly. However, what it tells me as a listing agent (remember I help people buy and sell homes) is that the buyer is flaky and makes snap decisions on when they need to go out. If I’m representing a buyer and we have to move quickly like this I ask more questions to gauge how many showings they have that day like, ” I’d like to show 123 Main Street today if possible what is the availability?” IF there are multiple showings the listing agent will tell me and we can often piggyback off another showing. That way we can still get in the home in a hour but my client looks better. I never give away if my client is writing an offer when I schedule a showing, even if that might be the case. This gives the listing agent a chance to call all past showings to notify them there might be an offer coming to the property. That is the last thing I want to do get more offers competing against my clients offer.

The second example shows a different more controlled position. It shows my client plans ahead on when they want to get out and see homes. The hour window even if we are only seeing one homes gives the illusion that we might be seeing more so the seller can’t expect an offer right after the showing.

Now while I schedule the showings, I do let the listing agent talk as much as they want. This gives me a chance to gauge the motivation of the seller based on what the listing agent says. Here is another example:

Great. Yes please show the home, we haven’t had a lot of traffic and the seller is very motivated.

Or

Great, go ahead and plan on it thanks for showing. We’ve had a lot of traffic and expect an offer tomorrow.

Between the two the listing agent works for the seller but as the seller which would you rather have your listing agent say? Even if both are true you want the flow of information controlled to be in the best light. Could an agent lie in their comments of feedback? Yes they could but I’ve found over the years those who are dishonest and stretch the truth get to have a reputation for being dishonest.

This has only covered the first appointment to see the home. Can you imagine the other things that are negotiated silently thought the process. In an ongoing effort to show what it is I do as a Realtor I will continue to write these blog articles explaining the small nuances of real estate.

When you buy a home in any market you might find yourself writing an offer quickly, then wondering if you made the right decision. The great news is you have a few weeks to do more research to make sure it’s the right home for you. During this time, you can hire an inspector to do a very thorough visual inspection. The two inspectors I recommend, and work with the most spend three hours at the home, then meet with the buyer and walk them through for an hour going over the findings. Then they will email you a large report. At this time, I will give you a few documents to review talking about mold, radon, property lines, utility costs, verifying square footage and so much more.

If anything comes up that you are unhappy about you have options:

1. Negotiate for the seller to take care of repairs.
2. Ask for a price reduction.
3. Decide you’ve gotten a good enough deal upfront and move forward.
4. Decide this isn’t the right home, and you can cancel the contract.

When it comes to negotiation there are a lot of elements that go into it. The advantage to having a realtor is they will be able to negotiate for you, and give you a third party perspective. It’s easy to fall in love with a house. A good realtor will be able to help you find the best home, and keep your best interest at heart. A great realtor will always be working for you, and be helping you to make the best decision for you. Whenever I negotiate a contract, the first thing I always ask is what do the buyers want, and what is in their best interest?

The seller disclosures are the first deadline in the contract. This is the seller’s deadline in Utah. We use a seven page form that goes over the history of the home for the time the seller has owned the property. It will cover:

*Ownership

*Additions/ Remodels

*Use of Property

*Roof

*Utilities

*Septic

*Cooling/Heating

*Equipment

*Fireplace/ Stoves

*Appliances

*Interior Features

*Exterior Features

*Termites/ Dry Rot/ Pests

*Structural Items and Soil

*Boundaries/ Easements

*Electrical

*Mold

*Other Moisture Conditions

*Home Ownership Association Contact Info

* Unpaid Assessments

*Insurance

*Energy Efficiency

*Square Footage

*Foreign Investment

In addition to this the seller will also provide you with a copy of the title report and CC&R’s (Codes Covenants and Restrictions) for the subdivision if they are still in place. They will also provide Home Owner’s Association information, if you are buying in an HOA. This will also cover if the property has any water rights, or a notice of environmental or code violations. Also if the home is rented, they will give you any contracts that affect the property.

I always advise my sellers to be as honest as possible on this form, but some things can be lost in translation. This is why the next step is buyer’s due diligence.

When you buy a home as part of the contract you the buyer, will put down some earnest money that will eventually go towards your down payment. Now a few things to remember about earnest money.

1. Earnest money is typically 0.5-1% of the purchase price of the home. The more you can put down the stronger your offer is to the seller.
2. Your earnest money can be lost if you the buyer, don’t keep up with your deadlines in the contract.
3. There are four deadlines in the Utah contract. Once you pass the 3rd called financing and appraisal deadline your earnest money goes “hard” and can be lost.
4. The earnest money protects you the buyer, from the seller cancelling on you halfway through the process to accept another offer.
5. If you decide this home is not the right home, and cancel the contract properly your earnest money will be returned.

I was asked the other day by a potential home seller, “What are the “ick” items in houses that we don’t see as homeowners?” Being in my position as a Realtor I get the opportunity to walk though hundreds of lived-in homes every year and I have come across some interesting stuff.

1- being the smell of your home. We all tend to do it, have you ever been on vacation and come home to your house and found it smelled a little off? That is what it can be like to walk into a home that I’ve never been in before. Or as the Febreeze commercials say, we’ve become nose blind to the smells in our home. A nice neutral smell like vanilla or spice can go a long way. Have a friend who will be honest with you, and whose smelling skills are noted, come into your home for a quick smell test. This will help you know where to start in fixing possible issues.

2-I see is worn out carpet. There seems to be a large misunderstanding with buyers on what new carpet would cost. So if we walk into a home that has bad carpet that will need to be replaced the buyer almost always wants to knock off $10,000 in their purchase price to cover the expense of putting in new carpet. Even if you, as the seller, have discounted your list price to cover the cost of new carpet. If it is possible I would recommend replacing the carpet before you list your home for sale or if funds are tight offer a carpet allowance for the new buyer so they can pick out their new carpet.

3-The last thing I want to cover on the “ick” items is fairly small but makes a big impact. When there is a burned out light bulb, beeping smoke alarm or other little maintenance issue, it makes the buyer start to wonder what other larger issues in your home may have been ignored. It’s better to take a quick walk of your home with fresh eyes to see what little items you’ve over-looked, that may make a big difference.

For my sellers as part of my services, I walk the home to give them an idea of what we can change to help their home show at its best and to make sure there aren’t any “ick” items that will turn off buyers.

In real estate I get the opportunity to tour hundreds of homes every year. Along with seeing these homes myself I’m also with a buyer looking to buy a home. I’m able to get feedback on what buyers really like in homes and what turns them off.

1-First impressions mean a lot when someone is looking at your home. With that, the curb appeal is very important. I always recommend to my sellers that they freshen up the front of the home. Did you know statistically replacing your front door will get you the best bang for your buck on resale?

2-When a buyer walks into your home the first thing they notice is the smell. This is an item that is most often over looked and it makes a big difference. The simplest fix is a few glad plug-ins that set off a nice fresh smell but not to over powering, as if you’re trying to hide something. On the other side make sure your cleaning products don’t have an overtly bleachy smell that may make buyers nervous.

3-If you have pets, even if they are nice, not having them home during showings is best. You want the potential buyer to see the home as their own and having a barking dog home can really detract from the experience and make them want to leave sooner, the more time they spend looking at your home the better.

4-I love seeing a home that has been staged, even if just by the home owner. We forget that living in a home and showing are not the same. If your closet is cramped full of all your clothing, what a buyer sees is that there isn’t enough closet space. Sometimes I walk into a home and see a very large sectional that makes the otherwise large living room look small, you can guess what the buyer sees. This would be easily fixed by removing a few sections of the couch.

There are more small things I see when walking though homes, but these are the few I see the most often that make the biggest impact.

Look though the pictures and see which one draws your eye the most? Buyers like to see how the room will look with furniture. They might not be able to envision how their queen sized bed will fit in the room. Looking at the staged picture below, they will know it fits just fine.

The goal is to sell your home for top dollar right? Having great pictures of a staged home will get more buyers offline and into your home. The more showings you get the better the chances are that you will get offers (as long as it’s priced correctly)

So should you stage your home?

I would recommend some type of staging. Even if that’s just a pair of fresh eyes walking though and moving your existing furniture for a better flow (which I offer with all my listings) or hiring a professional home staging company.

In this case I think a picture is worth one thousand words so let me show you a few thousand words. All three of these pictures are of a home that I sold last year. The “A” pictures where from when my seller bought the home four years prior. The “B” pictures where taken by Spotlight Home Tours a Utah company that I hire for my listings. As you can see below it’s worth my marketing dollars to show the home in it’s best light.

Which “home” would you want to go look at?

I love the difference between the two different pictures. I also helped this home owner stage the home with items he had around. That is a post for another day…..Staging your home: Is it worth it?

We are currently in a seller’s market; what does that mean for you as a buyer? It means there are more buyers than homes available for sale. Because of this, I’ve seen a lot of multiple-offer situations. Why, as a buyer, would you want to still buy in a seller’s market? Because interest rates are still amazing and over the life of your loan, the lower interest rate will save you more than a higher price point.

It’s still worth it to buy a home, but how do you win in a multiple-offer situation without overpaying?

I had some first time buyers who were looking for a home that they could do a little rehab work on to get some equity in a very competitive price point. Because of this, I was checking the multiple listing services many times a day, hoping to find a home that would be perfect for my buyers. I did one last check before I went to bed and found a great home listed just a few hours earlier. It was undervalued because a family estate wanted the home sold quickly. I sent it to my buyers and told them that if they wanted this home, we would have to see it as soon as possible the next day. The next day, I called the agent to make and appointment for 1:00 and she told me she already had an offer and planned on responding it by 3:00 that day. So, I helped my buyers write an offer with an escalation clause that said we would beat any offer by $1,000, up to a certain price.

We saw the home and they loved it, but there were already an additional two offers on it by then. I was grateful we had already written and signed an offer so that my buyers had a real chance. And you know what? They got the house.

There was a lot that helped my buyers win this multiple offer situation.

1. They were already qualified for a loan with their lender and had an approval letter before they went house shopping.

2. They where willing to be aggressive when it came to writing an offer quickly.

3. The escalation clause helped them win without spending their top dollar.

Have you seen these signs around town? Ever wonder what they are all about but don’t really want to call them. Let me tell you a story of a home seller who worked with one.

I have a friend who was building a new home and needed to sell his existing home. He reached out to me and a few other Realtors to price his home to see what price he could sell his property for in the current market. We all met and gave him our marketing plans and what the value of his home would be. My friend also decided to call a “we buy your house for cash” investor who came and gave his value of the home as well. The difference is that the investor plans to buy your home and they take the normal fees of selling your home, paying the listing agent, buyers agent, title insurance, any closing costs and what the home will need in repairs out of the price they will pay.

The house in question was great, just ten years old and had about half the basement finished. There were a few things my friend would need to do to get his home ready for market to get top dollar and as quickly as possible. The only problem is that my friend didn’t want to move twice, which with the timing of selling and building is always a little stressful and I couldn’t guarantee he wouldn’t have to move twice.

Because pricing is never an exact science there were a few different value opinions. The range of what his home would sell for was from $415,000-$435,000, so as you may have expected The investor said your home is worth $415,000 and I will buy it once your new build is done for $370,000. Not wanting to move twice, this was what my friend decided to do.

The investor bought the home and spent probably $5k in cleaning and adding plumbing for a future second kitchen and put it on the market. Any guess on what the home sold for? $427,900 However it took this investor 5 months to sell the home because he over priced the home in the beginning.

The best way to describe what “We buy houses for cash” investors do is that they solve a problem for you. It might be to save the stress of selling and building, It might be so that you don’t have to deal with showing your home or even just that you want to be done with one house and so you can move to the next. You just need to decide if the amount of money lost will be worth solving that problem.

My friend could have made $22,947 more on the sale of his home with a conventional realtor, but the stress of the unknown and the desire to be saved from the second move, as well as having to keep his home show ready wasn’t worth it.

When it was all said and done I think overall my friend was a happy with how the process went for him. If this is a route your interested in going I have two recommendations. Make sure you do your research into the companies you contact to make sure they are honest and ethical. The second is just like my friend did, make sure you know the value of your home before you ever make that first phone call to protect yourself in that transaction.